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- Strong increase in Net Profit by 47.4% to Euro 501m. vs. initial target for Euro 450m.
- Distribution of Euro 0.90 Dividend Per Share and 2 for 10 bonus shares
- Rapid expansion of Total Loans by 25.5% and Funds Under Management by 22.6%
- New Target for net profit CAGR of at least 20% for 2006-2008
- Target 2006 Net Profit of at least Euro 615m.
Group Eurobank EFG has delivered financial results well above the initial targets set by
Management at the beginning of 2005. Specifically, consolidated net profit increased by 47.4% to
Euro 501m., against a target for Euro 450m. This outstanding performance is underpinned by
market share gains in major banking segments both in Greece and in New Europe (Southeastern
and Central Europe), as well as higher efficiency. Dividends to be distributed to shareholders
amount to Euro 286m., or 57.1% of net profit. The results for the year 2005 were exceptional, as
the Group achieved strong growth rates across all sectors of operations. The contribution of
Eurobank employees was key to this outstanding performance, as their high level of competence
and dedication has resulted in improved efficiency of operations and stronger financial position for
the Group. The high profitability of the Group has enabled Eurobank Board of Directors to
propose to the Annual General Meeting of Shareholders the distribution of total dividends of
286m., that is Euro 0.90 per share (including the interim dividend of Euro 0.36). The proposed
dividend corresponds to a yield of 3.4% at 2005 year-end share price and represents an increase
of 25% against the dividend distributed for FY 2004, which exceeds the target for 15% annual
DPS growth. The BoD will also propose to the AGM a 2-for-10 stock bonus. Having already met
all financial targets that were set a year ago (Revenue Growth exceeding 15%, ROE over 20%
and Cost to Income Ratio below 48%), Eurobank's Management sets new targets for 2006-2008:
- Net Profit CAGR of at least 20% for the period 2006-2008
- Net Profit at least Euro 615m. in 2006 (+23%)
- ROE of 25% by 2008
- Cost to Income Ratio of 45% by 2008
The above financial targets reflect Management's estimates for the positive performance of the
Group in the coming years, given the current market conditions in Greece and in the countries of
New Europe (Bulgaria, Romania, Serbia, Poland and Turkey). The Group maintains its clear
focus on growing strongly and enhancing its regional footprint, and has a target for international
operations to contribute 20% of consolidated net profit by the year 2009.
The successful and accelerated development of operations in Retail and Wholesale Lending,
Asset Management and Capital Markets, resulted in consolidated net profit rising by 47.4% to
Euro 501m. in 2005. At the end of 2005, Total Assets stood at Euro 44.5bn, rising 34.6%.
Balance sheet expansion mainly reflects robust growth in business volumes in Greece and in the
Specifically, Eurobank increased its market share in Total Loans in Greece by 0.5% in one year
to 15.5%, with balances rising by 23.4%, against a market growth of 18.7%. Household Lending
(consumer and mortgage loans) was the driving force behind Eurobank's fast domestic
expansion, rising by 29.6% to Euro 12.2bn. Business Lending recorded substantial growth as
well, increasing by 18.2% to Euro 13.5bn. Taking into account Loans in New Europe, Total Loans
on a consolidated basis amounted to 27.4bn1, increasing by 25.5%. At the same time, the quality
of the loan book remains high, with the total NPL ratio standing at 3.02% at the end of 2005,
which is among the lowest in the Greek banking sector. Accumulated provisions cover 92% of
non-performing loans, safeguarding the Group against future credit risks.
The Asset Management Business generated strong results in 2005, as Customer Funds under
Management expanded by 22.6% to Euro 36.9 bn. In particular, Eurobank maintained in 2005 its
leading position in the Greek market of Mutual Funds, managing Euro 8.6bn and capturing a
market share of 30.6% overall (35.9% excluding money market funds). Eurobank ranked first in
Life Insurance in terms of premia production with an estimated market share of 19%. In Private
Banking, Eurobank affirmed its leadership, maintaining the #1 position in the Greek market with
AUM of Euro 6.3bn, increased by 26% against 2004. Moreover, Eurobank was named 'Best
Private Bank in Greece' by Euromoney for a second consecutive year.
The strong expansion of the loan portfolio drove Net Interest Income up 25.4% to Euro 1.4bn. At
the same time, the net interest margin remained above 3%, reflecting the profitable loan mix and
efficient management of total assets. The growing Loans and Funds under Management
balances, in conjunction with Capital Markets' operations (Treasury, Equity Brokerage,
Investment Banking) resulted in a 26% increase in Total Net Fees and Commissions to 420m.
Specifically, net fees from banking activities expanded by 22.8% to Euro 354.6m., while net fees
from other activities grew significantly by 46.5% to Euro 65.8m. Consequently, Core Revenues
(net interest income and total commission income) advanced by 25.6% to Euro 1.8bn., and
account for 96.3% of Total Operating Income. Non-core revenues, such as trading gains,
dividend income and other operating income rose modestly, reaching Euro 68.9m. in 2005, from
Euro 61.7m. in 2004, mainly due to the successful positions taken by Treasury and to the positive
returns offered by Capital Markets. As a result, Total Revenues climbed 25% to Euro 1.9bn., from
Euro 1.5bn. in 2004. This growth rate significantly exceeds the 15% target set at the beginning of
The efficiency ratio of the Group improved substantially in 2005. Specifically, the Cost-to-Income
ratio fell to 42.7% for the Greek operations, from 49.2% in 2004, and to 47.9% including New
Europe operations from 51.8% in 2004. This performance is particularly impressive, as it was
achieved in a year of investments to upgrade infrastructure and expand the branch network in
Greece and New Europe. In 2005, Total Operating Expenses were up 6.7% for the Greek
operations and 12.3% (on a comparable basis) for
the Group.
At the end of 2005, the Return on average Assets (after tax) reached 1.30%, from 1.14% in 2004,
while the Return on average Equity (after tax and minorities) improved significantly to 21.06%,
from 16.8% in 2004. Furthermore, Eurobank remains strongly capitalized, with the Total BIS Ratio
standing at 13.5% and the Tier I Ratio reaching 10.9% at the end of 2005. Shareholders' Equity
amounted to Euro 2.5bn.
Having recognised early on the strong economic growth potential of the countries of New Europe,
Eurobank implements a long-term expansion strategy in this region. Expansion outside Greece
continued at a fast pace in 2005. The Group enhanced its presence in Serbia-Montenegro,
acquiring 62.3% of Nacionalna Stedionica Banka at the end of September 2005. NSB together
with EFG Eurobank Beograd currently operate a network of 97 branches in the country.
Furthermore, Eurobank acquired control of HC Istanbul Holding A.S., parent company the
brokerage firm HC Istanbul Menkul Degerler A.S., gaining access to the large Turkish market and
achieving notable market share gains (from 1.5% to 2.6% at the end-2005) in a short period of
time. The Group acquired also the brokerage firm Capital Securities S.A. in Romania. Investing in
infrastructure of operations outside Greece continued in 2005. The products and services offered
by our Banks in New Europe were enriched, as new subsidiaries in leasing, factoring and real
estate commenced operations. At the same time, the ongoing staff training program resulted in
more efficient human resources. These efforts, in conjunction with the improving macroeconomic
conditions of the region, resulted in the rapid expansion of loan balances in New Europe, by
72.4% to 1.7 bn. Operating income from the Group's activities in New Europe amounted to 210
m. rising 44.4% y-o-y and contributing 11.3% of total operating income. Eurobank EFG is
proceeding with the establishment of a network of 50 branches in Poland in 2006, under the
name Polbank EFG. Polbank EFG already opened its first outlets in Warsaw, while the phone
banking center Polbank24 also begun operations. Within a month, 15 outlets of Polbank EFG will
service clients in Warsaw, Katowice and Poznan. With a population of 38 million, Poland is the
most populous country in which Eurobank has presence, and thus offers significant potential for
the development of banking activities, particularly in retail banking.
The dynamic growth of Eurobank, along with its high quality services offered were recognized
through a series of distinctions the Group received in 2005 by the most reputable international
and Greek media: Bank of the Year by 'Global Finance', Bank of the Year in Greece by 'The
Banker', Best Private Bank in Greece by 'Euromoney', and No1 Local Custodian by the 'Global
Custodian'. Moreover, the Bank received the 'CSR Award 2005' by the Athens Chamber of
Industry & Commerce.
Notes: 1. The above information is unaudited. 2. The audited financial statements for the year
ended 31 December 2005, as stipulated by the L.2190/1920 a.135, will be posted to the Bank's
website on 28 February 2006. The condensed financial statements, as stipulated by the
Ministerial Decree 23861/587/2004, will be published in the press and will be posted to the Bank's
website on the same date.

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